A&S Enterprises v Kema [2004] QBD HT 04 199

This summary was provided by CMS Cameron McKenna LLP.

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The content of the adjudicator's decision in which he criticised the non-availability of a representative of the employer for a meeting, together with his actions during the course of the adjudication, was felt by the court to be evidence that there was a real possibility of bias on his part and that he was therefore in breach of the requirements of natural justice. As a result his decision was not enforced.

His Honour Judge Seymour QC, Technology and Construction Court

27 July 2004

A & S Enterprises Ltd ("A&S") were employed by Kema Holdings Limited ("Kema") to develop a site in Derbyshire. In July 2003, the parties entered into a JCT Standard Form with Contractor's Design 1998 contract with various amendments. Following the non-payment of the sixth certificate issued by the architect, Mr Austin, A&S referred the matter to adjudication.

Once the reference to adjudication had been made, the adjudicator wrote to the parties setting out his proposed directions. During the adjudication, one of the issues that arose was that of the role of Mr Austin. The adjudicator therefore wrote again to the parties stating that "… I feel a meeting would be useful if Mr Austin would be prepared to attend and give his account of the events leading up to the dispute". Alternatively, the adjudicator said that he would "accept a written statement from him, provided that it was supplied in good time." A meeting was then arranged but due to its short notice, a key representative of Kema, a Mr Overend, was unable to attend. Instead, Kema suggested that they participate by way of conference call.

A meeting took place on 27 May 2004. Those who were physically present at the meeting included the adjudicator, A&S' representative and Mr Austin. Those who participated by conference call were Kema's representative and their solicitor. Mr Overend neither attended the meeting nor participated in it via the telephone link. During the course of the enforcement proceedings there was a dispute about whether anything was said at the meeting about Mr Overend's lack of participation. The adjudicator provided a witness statement in which he said that, other than limiting numbers, he "did not prescribe who should attend on behalf of either party" but that he "assumed that Mr Overend would attend, since he was integrally involved in the dealings with Mr Austin." The adjudicator also pointed out in his statement that he had gone to some trouble to ensure that telephone conferencing facilities were provided. He said that the primary purpose for this was so that Mr Overend could participate. Additionally, the adjudicator said in his statement that he was surprised to be told at the start of the conference call that Mr Overend was unable to take part.

On 16 June 2004, the adjudicator awarded A&S the sum of approximately £90,000. In his decision, the adjudicator said that no proper explanation was offered as to why Mr Overend "chose" not to make himself available and that his failure to take part in the meeting "was very unhelpful". He said that he had viewed Kema's submissions in that light. Kema refused to pay and A&S commenced proceedings to enforce the award. Kema resisted the enforcement of the award on the grounds that because of the adjudicator's comments about Mr Overend in his award, it appeared to be biased and that the adjudicator had therefore breached the requirement of natural justice.

In reaching his decision, Judge Seymour exercised the test of whether the circumstances would lead to a fair-minded and informed observer to conclude that there was a real possibility or danger that the adjudicator was biased. He said that each party must be given an adequate opportunity to put its case. Judge Seymour noted that the relevant correspondence did not make any suggestion that the purpose of the telephone conferencing facilities were to ensure that Mr Overend could participate. He found that the use of the expression "chose" in the decision indicated a criticism of Mr Overend's non-participation in the meeting. The Judge held that, on the basis of his examination of the relevant communications between the parties, the purpose of the meeting was primarily to hear from Mr Austin, the architect. The failure by the adjudicator to give Kema an opportunity to make Mr Overend available for oral questioning and without making it clear that he would be influenced to a significant degree by whether or not he had heard from Mr Overend was, the Judge said, evidence that the adjudicator had failed to comply with the requirements of natural justice.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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